Year-over-year inflation receded a bit more in January, according to new data out Tuesday, but prices jumped for the month as pain from continued high cost of living is still being heavily felt among workers.
The Consumer Price Index (CPI) for all items rose 6.4 percent for the 12 months ending in January, before seasonal adjustment, the U.S. Bureau of Labor Statistics (BLS) reported Feb. 14. On a monthly basis, the CPI rose 0.5 percent in January, seasonally adjusted, after increasing 0.1 percent in December.
The index for shelter was the largest contributor to the monthly all items increase, the BLS reported, accounting for nearly half of the monthly all items increase. Still, the indexes for food, gasoline and natural gas also contributed to the increase.
It's the latest month that inflation has slowed: The December CPI for all items increased 6.5 percent year-over-year, while the November CPI for all items rose 7.1 percent for the 12 months ending in November, before seasonal adjustment—both notable decreases from the 9.1-percent high notched for the period ending in June.
Still, the CPI numbers did not drop as much as expected—many analysts thought it would fall to 6.2 percent year-over-year—signaling continuing struggle for consumers. Overall, inflation isn't dropping significantly enough to make a meaningful impact on workers just yet, as wages have not kept pace with inflation and workers' pocketbooks are continually stretched as employees struggle with higher costs on all expenses.
Real average hourly earnings decreased 1.8 percent, seasonally adjusted, from January 2022 to January 2023, the BLS reported separately Tuesday. The change in real average hourly earnings combined with an increase of 0.3 percent in the average workweek resulted in a 1.5-percent decrease in real average weekly earnings over this period.
Overall, unrelenting inflation has taken its toll, with multiple reports finding just how problematic it's been.
Nearly two-thirds of consumers (64 percent) said they were living paycheck to paycheck in December, according to a recent report from LendingClub which surveyed nearly 4,000 Americans, up from 61 percent who said they were doing so a year earlier. And half of high-income earners—those making $100,000 or more—said their pay is being stretched too thin, a jump from 42 percent a year ago, according to the report.
Meanwhile, a survey of 2,000 Americans by U.S. News & World Report found that 41 percent of Americans said they stopped saving for retirement in 2022, while one-third said they dipped into their retirement funds last year—both the result of skyrocketing everyday costs.